Abstract
Facing declining reserves and high inflation, Ethiopian authorities have implemented an effective macroeconomic adjustment package supported by the IMF under the rapid-access component of the Exogenous Shocks Facility. The global recession is putting renewed pressure on the external position, via weaker export receipts and remittances and slowing inward direct investment. Supporting structural measures focus on tax reform, the control of public enterprise borrowing, and the control of liquidity through indirect instruments.
Annex I: The Federal Democratic Republic of Ethiopia Relations with the Fund
(as of June 30, 2009)
I. Membership Status: Joined: December 27, 1945; Article XIV
II. General Resources Account:
| SDR Million | %Quota | |
|---|---|---|
| Quota | 133.70 | 100.00 |
| Fund holdings of currency | 126.22 | 94.41 |
| Reserve Tranche Position | 7.51 | 5.62 |
| Lending to the Fund | ||
| Holdings Exchange Rate |
| SDR Million | %Quota | |
|---|---|---|
| Quota | 133.70 | 100.00 |
| Fund holdings of currency | 126.22 | 94.41 |
| Reserve Tranche Position | 7.51 | 5.62 |
| Lending to the Fund | ||
| Holdings Exchange Rate |
III. SDR Department:
| SDR Million | %Allocation | |
|---|---|---|
| Net cumulative allocation | 11.16 | 100.00 |
| Holdings | 0.04 | 0.40 |
| SDR Million | %Allocation | |
|---|---|---|
| Net cumulative allocation | 11.16 | 100.00 |
| Holdings | 0.04 | 0.40 |
IV. Outstanding Purchases and Loans
| SDR Million | %Quota | |
|---|---|---|
| ESF RAC Loan | 33.43 | 25.00 |
| SDR Million | %Quota | |
|---|---|---|
| ESF RAC Loan | 33.43 | 25.00 |
V. Latest Financial Arrangements:
| Type | Date of Arrangement | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (SDR Million) |
|---|---|---|---|---|
| PRGF | Mar 22, 2001 | Oct 31, 2004 | 100.28 | 100.28 |
| PRGF | Oct 11, 1996 | Oct 22, 1999 | 88.47 | 29.49 |
| SAF | Oct 28, 1992 | Nov 08, 1995 | 49.42 | 49.42 |
| Type | Date of Arrangement | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (SDR Million) |
|---|---|---|---|---|
| PRGF | Mar 22, 2001 | Oct 31, 2004 | 100.28 | 100.28 |
| PRGF | Oct 11, 1996 | Oct 22, 1999 | 88.47 | 29.49 |
| SAF | Oct 28, 1992 | Nov 08, 1995 | 49.42 | 49.42 |
VI. Projected Payments to Fund1/
(SDR Million; based on existing use of resources and present holdings of SDRs):
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2009 | 2010 | 2011 | 2012 | 2013 | |
| Principal | |||||
| Charges/Interest | 0.11 | 0.21 | 0.21 | 0.21 | 0.21 |
| Total | 0.11 | 0.21 | 0.21 | 0.21 | 0.21 |
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2009 | 2010 | 2011 | 2012 | 2013 | |
| Principal | |||||
| Charges/Interest | 0.11 | 0.21 | 0.21 | 0.21 | 0.21 |
| Total | 0.11 | 0.21 | 0.21 | 0.21 | 0.21 |
VII. Implementation of HIPC Initiative:
Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts can not be added.
Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.
| Enhanced | |||||
| I. Commitment of HIPC assistance | Framework | ||||
| Decision point date | November 2001 | ||||
| Assistance committed by all creditors (US$ Million)1/ | 1,982.20 | ||||
| of which: IMF assistance (US$ million) | 60.85 | ||||
| (SDR equivalent in millions) | 45.12 | ||||
| Completion point date | April 2004 | ||||
| II. Disbursement of IMF assistance (SDR Million) | |||||
| Assistance disbursed to the member | 45.12 | ||||
| Interim assistance | 10.28 | ||||
| Completion point balance | 34.84 | ||||
| Additional disbursement of interest income2/ | 1.54 | ||||
| Total disbursements | 46.66 | ||||
Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts can not be added.
Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.
| Enhanced | |||||
| I. Commitment of HIPC assistance | Framework | ||||
| Decision point date | November 2001 | ||||
| Assistance committed by all creditors (US$ Million)1/ | 1,982.20 | ||||
| of which: IMF assistance (US$ million) | 60.85 | ||||
| (SDR equivalent in millions) | 45.12 | ||||
| Completion point date | April 2004 | ||||
| II. Disbursement of IMF assistance (SDR Million) | |||||
| Assistance disbursed to the member | 45.12 | ||||
| Interim assistance | 10.28 | ||||
| Completion point balance | 34.84 | ||||
| Additional disbursement of interest income2/ | 1.54 | ||||
| Total disbursements | 46.66 | ||||
Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts can not be added.
Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.
VIII. Implementation of Multilateral Debt Relief Initiative (MDRI):
The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.
| I. MDRI-eligible debt (SDR Million)1/ | 112.07 | |||||
| Financed by: MDRI Trust | 79.66 | |||||
| Remaining HIPC resources | 32.41 | |||||
| II. Debt Relief by Facility (SDR Million) | ||||||
| Eligible Debt | ||||||
| Delivery Date | GRA | PRGF | Total | |||
| January 2006 | N/A | 112.07 | 112.07 | |||
The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.
| I. MDRI-eligible debt (SDR Million)1/ | 112.07 | |||||
| Financed by: MDRI Trust | 79.66 | |||||
| Remaining HIPC resources | 32.41 | |||||
| II. Debt Relief by Facility (SDR Million) | ||||||
| Eligible Debt | ||||||
| Delivery Date | GRA | PRGF | Total | |||
| January 2006 | N/A | 112.07 | 112.07 | |||
The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.
IX. Safeguards Assessment
According to Fund policy, an assessment of the National Bank of Ethiopia (NBE) was completed on September 12, 2001, with respect to the Poverty Reduction and Growth Facility arrangement approved on March 22, 2001. The NBE has made progress in implementing the recommendations of the safeguards assessment. An update assessment is currently underway in the context of Ethiopia’s Exogenous Shocks Facility approved in January 2009, and a safeguards mission visited Addis Ababa in July 2009.
X. Exchange Rate Arrangement
The de facto exchange rate regime is classified as a crawl-like arrangement, in light of the recent market developments. The authorities describe their exchange rate regime as a managed float with no predetermined path for the exchange rate, and the birr has steadily depreciated against the U.S. dollar. The pace of the depreciation, however, has been stable. Furthermore, the NBE supplies foreign exchange to the market based on plans established at the beginning of each fiscal year that took into account estimates of likely supply and demand. The transaction-weighted average interbank market exchange rate on July 17, 2009, was Br 12.4553 = US$1.
Ethiopia currently maintains four restrictions on the payments and transfers for current international transactions, which relate to (a) the tax certification requirement for repatriation of dividend and other investment income; (b) restrictions on repayment of legal external loans and supplies and foreign partner credits; (c) rules for issuance of import permits by commercial banks; and (d) the requirement to provide a clearance certificate from NBE to obtain import permits. These restrictions are inconsistent with Article VIII, Section 2(a), of the IMF’s Articles of Agreement and remain unapproved.
XI. Article IV Consultation
Ethiopia is on the standard 12-month consultation cycle. The Executive Board concluded the last Article IV consultation on July 14, 2008 (IMF Country Report No. 08/264).
XII. Technical Assistance(2004–present)
| Department | Purpose | Time of Delivery |
|---|---|---|
| STA | Monetary and financial statistics mission | January–February 2004 |
| STA | Balance of payments statistics | April 2004 |
| MFD | Payments system | May 2004 |
| MFD | Bank supervision | July 2004 |
| STA | Monetary and financial statistics | September 2004 |
| STA | Producer price index | October 2004 |
| FAD | Modernization of tax administration | November 2004 |
| FAD | Program/performance budgeting | January–February 2005 |
| STA | Balance of payments statistics | January–February 2005 |
| MFD | Bank supervision | June–July 2005 |
| STA | Balance of payments statistics | July 2005 |
| STA | Government finance statistics | August 2005 |
| FAD | Tax administration | September 2005 |
| MCM | Bank supervision | February 2006 |
| MCM | Modernization of payment systems | March 2006 |
| STA | Consumer price data | March 2006 |
| FAD | Tax policy assessment | May 2006 |
| MCM | Bank supervision | July 2007 |
| MCM | Monetary operations | July 2007 |
| MCM | Payment system | July 2007 |
| AFE | Customs Administration | October 2007 |
| FAD | Public expenditure management | December 2007 |
| AFE | Macro-fiscal | January 2008 |
| AFE | Program budgeting | January 2008 |
| AFE | Banking Supervision | February 2008 |
| AFE | Consumer price index | March 2008 |
| MCM | Islamic banking regulation | April 2009 |
| AFE | Banking Supervision | June 2009 |
| Department | Purpose | Time of Delivery |
|---|---|---|
| STA | Monetary and financial statistics mission | January–February 2004 |
| STA | Balance of payments statistics | April 2004 |
| MFD | Payments system | May 2004 |
| MFD | Bank supervision | July 2004 |
| STA | Monetary and financial statistics | September 2004 |
| STA | Producer price index | October 2004 |
| FAD | Modernization of tax administration | November 2004 |
| FAD | Program/performance budgeting | January–February 2005 |
| STA | Balance of payments statistics | January–February 2005 |
| MFD | Bank supervision | June–July 2005 |
| STA | Balance of payments statistics | July 2005 |
| STA | Government finance statistics | August 2005 |
| FAD | Tax administration | September 2005 |
| MCM | Bank supervision | February 2006 |
| MCM | Modernization of payment systems | March 2006 |
| STA | Consumer price data | March 2006 |
| FAD | Tax policy assessment | May 2006 |
| MCM | Bank supervision | July 2007 |
| MCM | Monetary operations | July 2007 |
| MCM | Payment system | July 2007 |
| AFE | Customs Administration | October 2007 |
| FAD | Public expenditure management | December 2007 |
| AFE | Macro-fiscal | January 2008 |
| AFE | Program budgeting | January 2008 |
| AFE | Banking Supervision | February 2008 |
| AFE | Consumer price index | March 2008 |
| MCM | Islamic banking regulation | April 2009 |
| AFE | Banking Supervision | June 2009 |
XIII. Resident Representative
The IMF has had a resident representative office in Addis Ababa since 1993. The current Resident Representative, Mr. Sukhwinder Singh, took up the post in January 2009.
Annex II: The Federal Democratic Republic of Ethiopia Joint Managerial Action Plan July 2009–June 2010
| Title | Products | Provisional timing of missions | Expected delivery date |
|---|---|---|---|
| A. Mutual information on relevant work programs | |||
| The World Bank work program in the next 12 months |
Economic policy analysis and advice:
|
July 2009–June 2010 July 2009–June 2010 |
Q1 2010 Q3 2011 |
| April 2009–December 2009 | Q2 2009 | ||
Technical Assistance:
|
July 2009–June 2010 TBC | June 2010 Q4 2011 | |
| July 2009–June 2010 | |||
| Dec 2009 | |||
| September 2009 July 2009-June 2010 |
|||
| December 2009 | |||
| The Fund work program in the next 12 months | Macroeconomic policy analysis and advice IMF Program
|
Late 2009 (Article IV) | Early 2010 |
| June 2009 February 2010 July 2009 |
August 2009 March 2010 April 2010 |
||
Technical assistance
|
August–December 2009 September 2009– March 2010 June 2009–April 2010 |
||
| B. Requests for work program inputs | |||
| Fund request to Bank |
|
||
| Bank request to Fund |
|
||
| C. Agreement on joint products and missions | |||
| Joint products in the next 12 months | Debt Sustainability Analysis | August 2009 | |
| Title | Products | Provisional timing of missions | Expected delivery date |
|---|---|---|---|
| A. Mutual information on relevant work programs | |||
| The World Bank work program in the next 12 months |
Economic policy analysis and advice:
|
July 2009–June 2010 July 2009–June 2010 |
Q1 2010 Q3 2011 |
| April 2009–December 2009 | Q2 2009 | ||
Technical Assistance:
|
July 2009–June 2010 TBC | June 2010 Q4 2011 | |
| July 2009–June 2010 | |||
| Dec 2009 | |||
| September 2009 July 2009-June 2010 |
|||
| December 2009 | |||
| The Fund work program in the next 12 months | Macroeconomic policy analysis and advice IMF Program
|
Late 2009 (Article IV) | Early 2010 |
| June 2009 February 2010 July 2009 |
August 2009 March 2010 April 2010 |
||
Technical assistance
|
August–December 2009 September 2009– March 2010 June 2009–April 2010 |
||
| B. Requests for work program inputs | |||
| Fund request to Bank |
|
||
| Bank request to Fund |
|
||
| C. Agreement on joint products and missions | |||
| Joint products in the next 12 months | Debt Sustainability Analysis | August 2009 | |
Annex III: The Federal Democratic Republic of Ethiopia Statistical Issues
(as of July 2009)
I. Assessment of Data Adequacy for Surveillance
General: Data provided to the Fund are adequate for surveillance and program monitoring purposes. Despite recent progress, there are some shortcomings in real, fiscal, and balance of payments statistics.
National Accounts: Shortcomings affect the accuracy and reliability of the data. First, the quality of GDP estimates by industry is affected by the poor coverage of construction activities. Second, while some progress has been made in making GDP estimates by final expenditure consistent with output-based measures, there remain substantial shortcomings, particularly in the estimation of private consumption and fixed capital formation. The statistical discrepancy in GDP estimates by expenditure categories has increased in recent years.
Government finance statistics: Despite recent improvements, fiscal balance statistics continue to be affected by shortcomings. Timely data on the consolidated operations of local governments is unavailable. Significant discrepancies between data on the domestic and foreign financing of the budget deficit and the monetary accounts continue to complicate assessment of fiscal developments. Ensuring the integrity of consolidated budget reporting in a timely fashion will be a continuing task.
Monetary statistics: The monetary statistics are broadly adequate for analytical purposes, although there is a need for the NBE to resume data submissions based on the SRF and IMD framework. For policy purposes, however, ensuring data collection and reporting in a timely manner continues to be critical.
Balance of payments: Balance of payments data still require improvements on coverage, valuation, timing, and classification of transactions. These include long delays in the collection of trade and tourist arrival data and poor data on capital flows.
II. Data Standards and Quality
| Ethiopia participates in the General Data Dissemination System (GDDS) and metadata were partially updated in early 2008. Ethiopia participates in the GDDS project for capacity building in statistics in Anglophone Africa (2006–09) including macro-economic and financial statistics and socio-demographic statistics. | No Report on the Observance of Standards and Codes (ROSC) has been completed. |
| Ethiopia participates in the General Data Dissemination System (GDDS) and metadata were partially updated in early 2008. Ethiopia participates in the GDDS project for capacity building in statistics in Anglophone Africa (2006–09) including macro-economic and financial statistics and socio-demographic statistics. | No Report on the Observance of Standards and Codes (ROSC) has been completed. |
Annex IV Ethiopia: Table of Common Indicators Required for Surveillance
(as of July 21, 2009)
Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.
Both market-based and officially determined, including discount rates, money market rates, and rates on treasury bills, notes, and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds, extrabudgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
| Date of Latest Observation | Date Received | Frequency of Data6/ | Frequency of Reporting6/ | Frequency of Publication6/ | |
|---|---|---|---|---|---|
| Exchange rates | July 17, 2009 | July 20, 2009 | D | D | D |
| International reserve assets and reserve liabilities of the monetary authorities1/ | May 2009 | July 2009 | M | M | M |
| Reserve/base money | May 2009 | July 2009 | M | M | M |
| Broad money | May 2009 | July 2009 | M | M | M |
| Central bank balance sheet | May 2009 | July 2009 | M | M | M |
| Consolidated balance sheet of the banking system | May 2009 | July 2009 | M | M | M |
| Interest rates2/ | April 2009 | June 2009 | M | M | M |
| Consumer Price Index | June 2009 | July 2009 | M | M | M |
| Revenue, expenditure, balance, and composition of financing3/–general government4/ | December 2009 | April 2009 | Q | Q | Q |
| Revenue, expenditure, balance, and composition of financing3/–central government | March 2009 | June 2009 | Q | Q | Q |
| Stocks of Central government and central government-guaranteed debt5/ | 2007/08 | November 2008 | A | On mission | A |
| External current account balance | March 2009 | June 2009 | Q | Q | Q |
| Exports and imports of goods and services | March 2009 | June 2009 | Q | Q | Q |
| GDP/GNP | 2007/08 | November 2008 | A | On mission | A |
| Gross external debt | 2007/08 | November 2008 | A | On mission | A |
| International Investment Position | … | … | NA | NA | NA |
Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.
Both market-based and officially determined, including discount rates, money market rates, and rates on treasury bills, notes, and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds, extrabudgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
| Date of Latest Observation | Date Received | Frequency of Data6/ | Frequency of Reporting6/ | Frequency of Publication6/ | |
|---|---|---|---|---|---|
| Exchange rates | July 17, 2009 | July 20, 2009 | D | D | D |
| International reserve assets and reserve liabilities of the monetary authorities1/ | May 2009 | July 2009 | M | M | M |
| Reserve/base money | May 2009 | July 2009 | M | M | M |
| Broad money | May 2009 | July 2009 | M | M | M |
| Central bank balance sheet | May 2009 | July 2009 | M | M | M |
| Consolidated balance sheet of the banking system | May 2009 | July 2009 | M | M | M |
| Interest rates2/ | April 2009 | June 2009 | M | M | M |
| Consumer Price Index | June 2009 | July 2009 | M | M | M |
| Revenue, expenditure, balance, and composition of financing3/–general government4/ | December 2009 | April 2009 | Q | Q | Q |
| Revenue, expenditure, balance, and composition of financing3/–central government | March 2009 | June 2009 | Q | Q | Q |
| Stocks of Central government and central government-guaranteed debt5/ | 2007/08 | November 2008 | A | On mission | A |
| External current account balance | March 2009 | June 2009 | Q | Q | Q |
| Exports and imports of goods and services | March 2009 | June 2009 | Q | Q | Q |
| GDP/GNP | 2007/08 | November 2008 | A | On mission | A |
| Gross external debt | 2007/08 | November 2008 | A | On mission | A |
| International Investment Position | … | … | NA | NA | NA |
Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.
Both market-based and officially determined, including discount rates, money market rates, and rates on treasury bills, notes, and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds, extrabudgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.